Posts Tagged ‘Ministry of Agriculture’

Sign in dairy case telling shoppers they are limited to only one package of butter per person

Butter isn’t as essential in Japanese cuisine as it is in certain other countries’ national styles of cooking, but it does have its place, most commonly in white sauces and baking, and anyone here who uses it regularly has had to pay premium prices for it. Lately, they’ve been paying even more.

In a recent Asahi Shimbun feature a housewife shopping in Minato Ward, Tokyo, is tempted to pick up a package of “luxury brand” butter because all the regular butter is sold out, but in the end she leaves the store without it because she just can’t see spending that much money. The article doesn’t say what that price is, but regular butter right now is said to cost “¥400 or more” for 200 grams, and the luxury butter is “twice as expensive.”

The implication is that ¥400 is already too much to pay, but in any case wherever you go, regular butter tends to be sold out, and many supermarkets now limit customers to only one package per trip. More significantly, businesses such as ramen restaurants and bakeries, which rely on butter as an essential ingredient, are also suffering from the price increase. That’s because there is an acute butter shortage.

And the reason there’s a butter shortage is that there’s a milk shortage and butter is the least prioritized of dairy products. Most milk that’s produced in Japan is sold as milk, and only when there is milk left over after being channeled into by-products like cheese and yogurt does butter get made. Unlike most other dairy products, butter can be frozen and stored for a long period of time.

Over the summer the retail price of eggs has increased anywhere from 20 to 50 percent, which is a significant change for consumers but also for people who are pushing Abenomics and its focus on reigniting inflation, since eggs have for years been seemingly been impervious to price changes. At the beginning of May, it cost about the same to buy a package of 10 eggs as it cost to buy a package of ten eggs thirty years ago. As the prime buka no yutosei (best “student” among product prices), it’s one of those constants people took for granted.

However, the sudden increase was not entirely due to serendipity or natural market forces. In fact, the price hike was engineered in a bid to maintain market stability. In 2011 the agriculture ministry implemented a subsidy to control the price of eggs. Because a sudden drop in price can have an immediate harmful effect on egg producers’ bottom lines and potentially damage the industry as a whole, the ministry automatically provides funds when the wholesale price goes below ¥159 per kilogram. These funds are used to cull egg-laying chickens in order to reduce supply and put pressure on demand, thus pushing the price back up.

According to Tokyo Shimbun, in May the price dropped below the designated line and the subsidy kicked in. Producers receive ¥150-¥200 for every chicken they kill, and the ministry estimates that from mid-May until mid-July, when the subsidy was available, about 5 million birds were culled. Not all were thrown away. Many were processed and sold as meat, for which the producers can earn an additional ¥20-¥50 per bird, an aspect that makes the system even more popular among producers since it rationalizes the process of replacing chickens.

Usually, a hen becomes productive — meaning it starts laying eggs — 150 days after birth, and remains productive for about 500 days. The dropping off point for production can vary greatly from one bird to the next, so whenever the subsidy is in effect egg producers get rid of those older chickens that are borderline productive since it is monetarily advantageous to do so under the system. Egg production is a relatively easy farming method since it is all about volume. In the past ten years the average number of chickens kept by each producer has increased from about 33,000 to more than 50,000, thus indicating the loss of small-scale farmers and the dominance of corporate egg producers.

Of course, when it’s all about volume it’s also all about controlling inventory, which is bad for chickens. Besides the horrendous factory conditions that egg-laying hens have to endure, their fate is also subject to capricious market forces, not to mention natural ones.

This summer was one of the hottest on record, and a lot of chickens died from heat stroke, so even after the subsidy system was lifted in July, the number of producing hens continued to decrease, sending the price of eggs to its highest levels ever. Moreover, one condition for receiving subsidies is that the producer not replace culled chickens for at least 60 days. According to JA, its Zenno Tamago brand, often used as the index for egg prices, was up by as much as ¥55 per kg on Sept. 27 compared to the same date in 2012. (For reference one LL-size egg is 70-76 grams, and one kg now costs about ¥225.) But chickens grow fast, so the price is expected to drop to its normal level by December’s Christmas cake season.

The Central Union of Agricultural Cooperatives, more commonly known by the acronym JA (for Japan Agriculture), or the Japanese abbreviation Nokyo, has, in one form or another, controlled the finances and structure of the country’s farm sector since the early 1950s. That means not only does JA help keep prices high so that farmers can make a living, but provides farm families with everything they need to make that living, from loans to sales of equipment, supplies and fertilizer. It even sells insurance and does banking, under an exception granted by the central government. As with any semi-public organization that has a given field to itself, JA’s operations have become sclerotic over the years. In 2008, the agricultural ministry conducted a survey of farmers. When asked where they bought their fertilizer, 70 percent answered “JA,” but 80 percent of these farmers also answered that they were “dissatisfied” with the cooperative’s prices.

JA is famous for using a lot of middlemen in their sales channels, which invariably drives up the prices of everything they sell. In addition, various handling fees and distribution costs make the prices even higher. In a recent Asahi Shimbun article a professor at the Tokyo University of Agriculture said that with the recession and the possibility of more imports coming into the Japanese market, farmers have become extra sensitive about costs and as a result are beginning to wonder if JA is really looking after their interests properly. Some have already started leaving the cooperative.

But where to go? According to the agricultural ministry survey, only 2.5 percent of farmers were buying their fertilizer from so-called home centers in 2008, but that portion has likely gone up considerably since then. Home centers, called home improvement centers in the U.S., are large retail outlets that sell everything for the home, but mainly supplies that homeowners need for things like repairs or renovations, as well as gardening and landscaping. The Japan DIY (Do-It-Yourself) Association reports that there were 4,310 home centers in Japan in 2011, double the number that existed in 1990. The home center chain with the most outlets is Komeri, who own more than a thousand. And while home center sales have mostly been stagnant since 2005 owing to the growth of other retail models, mainly drug stores, Komeri is also growing. The chain says it plans to double its present number of stores in 10 years’ time.

Japan’s annual research whaling expedition is now being carried out in the Antarctic. As always, the controversy over whaling receives more coverage in the foreign press than it does in the Japanese media, which for all intents and purposes doesn’t normally pay attention unless arrests or violence is involved. However, Tokyo Shimbun last week reported on some of the commercial aspects of the issue.

According to the newspaper, in 2011 the amount of frozen whale in storage and designated for retail distribution exceeded 5,000 tons, which is almost three times the amount of frozen whale meat in storage 10 years ago. There are two sources of this meat: imports from other whale-catching countries, and the research whaling program carried out by Japan’s Institute of Cetacean Research and the company Kyodo Senpaku. The purpose of the research is to “determine growth by means of checking weight and body length” of whales that are caught and killed. Afterward, the whale meat is sold to help pay for the research, which costs about ¥6 billion a year. The Japanese government provides a subsidy of ¥1 billion, which means the meat sales have to cover the remaining ¥5 billion.

The increase in frozen inventory means that the costs aren’t being covered, and that the research project is operating in the red, though Tokyo Shimbun doesn’t say by how much. Until 2006, the amount of yearly stock kept increasing because the annual catch quota was also increasing, but ever since the Sea Shepherd Conservation Society started interfering with the Antarctic hunt the amounts caught have not increased. However, overall stocks have. At the end of 2010, they amounted to 5,300 tons, and though Kyodo Senpaku only brought back 18 percent of its planned catch last year after it cut short the hunt, as of last October stocks of whale meat had increased to 5,400 tons.